Owners in the UK who rent their properties through a local authority scheme are facing £220 million in rent arrears, according to new research.

The National Landlords Association, the leading representative body for private residential landlords in the UK, is urging the Government to make immediate major changes to the Local Housing Allowance system as tenants are failing to pass on the money.

The Local Housing Allowance (LHA) was introduced for new tenancies in April 2008 when it replaced the old housing benefit system. Under the new rules, instead of rent being paid directly to private landlords to cover housing costs, it now goes straight to the tenants who are responsible for passing on the rent money to their landlord.

In practice, many tenants are failing to make these payments and this is causing major problems, according to the NLA. In the most serious cases, landlords are refusing to let to tenants who are in receipt of Housing Benefit because of rental arrears.

‘The Government must bring forward their planned review of LHA as soon as possible. If ministers are serious about the importance of the contribution the private-rented sector makes to the housing mix, then tenants’ right to choose to have their housing benefit paid direct to their landlords must be reinstated immediately,’ said David Salusbury, NLA Chairman.

‘The reality is that both tenants and landlords are losing out under the current rules. The NLA is hearing about more and more landlords who are refusing to let to LHA tenants. We need more affordable housing in the UK, not less. Action is needed and it is needed now,’ he added.

The Conservative Party has recently announced they will reinstate direct rent payments to landlords where housing benefit tenants choose, if they form the next government after next year’s general election.

The NLA surveyed 1,000 landlords from around the UK who operate 13,000 LHA tenancies. The total rent arrears accumulated by these landlords since the introduction of LHA is £4.4 million, or an average of £4,400 per landlord. According to the Government there are almost 675,000 LHA tenancies. Assuming the NLA research is representative of the total LHA sector, rent arrears across the UK could be in excess of £220 million, the organisation said.